HSBC BANK EGYPT S.A.E.

Annual Report and Accounts 2008

Board of Directors

Abdel Salam El Anwar, Chairman and CEO Youssef Nasr, Deputy Chairman Mounir El Zahid Halla Sakr David Hodgkinson Medhat Hassanein John Coverdale Robert Gray Mahmoud Abdallah

Contents

1 Board of Directors 2 Report of the Directors 6 Auditors ’ Report 7 Balance Sheet 8 Income Statement 9 Changes in Shareholders ’ Equity Statement 10 Appropriation Account 11 Cash Flow Statement 13 Notes on the Accounts 30 HSBC Bank Egypt Head Office and Branches 33 The HSBC Group: International Network

HSBC Bank Egypt S.A.E. 306, Corniche El Nil, Maadi, Cairo, Egypt Telephone: (202) 2529 8000 Facsimile : (202) 2529 8080 Web: www.egypt.hsbc.com

1 HSBC BANK EGYPT S.A.E.

Report of the Directors

The Board of Directors has pleasure in presenting the the local currency bond rating from Baa3 to Ba1 in June Annual Report of HSBC Bank Egypt S.A.E. for the year 2008. Shortly afterwards, and for the same ended 31 December 2008. macroeconomic concerns, Fitch downgraded Egypt's ratings outlook on the Long-Term Foreign Currency Economic review and future outlook Issuer Default Rating to 'Stable' from 'Positive', and cut the country's local currency to BBB- from BBB, with The Egyptian economy continued to deliver an the outlook remaining 'Stable'. Nevertheless, Standard impressive performance during the year 2007/2008 and Poor's affirmed Egypt's ratings and outlook at BB+ with a 7.2% real GDP growth, slightly above the 7.1% and BBB- for its foreign currency rating and local posted in 2006/2007. Previously helped by the currency long-term sovereign credit rating, with a favorable external environment, the government's 'Stable' outlook in September 2008. continuous implementation of reforms and its move Following the global financial crisis and sharp towards economic liberalisation have contributed to economic slowdown, GDP growth decelerated in Q1- this robust performance. The growth was driven by a 2008/2009 to 5.8%. Yet, Egypt's outlook remains strong domestic demand and as well by strong foreign broadly positive. In fact, the country remains relatively exchange earnings including Tourism, Suez Canal sheltered from the financial crisis with the banking receipts as well as Foreign Direct Investment billion system having a limited exposure to troubled financial inflows. institutions and no exposure to the toxic assets that are Year 2007/2008 was another record year for troubling many western banks. It is also worth noting Tourism with the number of visitors going up by 19% that the banking sector remains largely liquid with to around 13 million and revenues growing to US$11 Loan-to-Deposit ratios in the neighborhood of 52%. billion, up 32% year on year. The Suez Canal revenues Besides, domestic demand looks set to remain fairly rose by 23.6% to a record US$5.2 billion. Likewise, resilient with the government having announced an Foreign Direct Investment into the Egyptian economy EGP15 billion fiscal stimulus package that includes witnessed a 19% growth from US$11.1 billion in fiscal infrastructure spending, tax exemptions and tariff year 2006/2007 to US$13.2 billion in 2007/2008, reductions. Whilst trading prospects will likely be around half of which went into greenfield investments hampered in the short term due to the European mainly in the energy sector. economic downturn, it is expected that the country's low cost of labor will continue to underpin growth Attracted by Egypt's geographical location, cheap through 2009. and competitive labor and input costs, new foreign operators have contributed to higher growth in the HSBC Bank Egypt at a Glance industry/manufacturing sector by 8%. Other fast growing sectors of the economy over the past year Results for the year ending 31 December 2008 include the Telecommunications and Construction sectors, which have expanded by 14.2% and 14.8%, HSBC Bank Egypt performance progressed during respectively. Moreover, Real Estate has seen a surge in 2008 with total assets up 24% to reach EGP34 billion at growth and received US$400 million in foreign year-end. Customer deposits and loan portfolio investments. increased by 32.2% and 34.6% respectively. Net However, rising inflation has been the government's operating profits increased by 39.5% and net profit by biggest challenge. After declining to 7% in late 2007, 28.5%, to record EGP1.16 billion for the year ending Consumer Price Index (CPI) inflation accelerated since December 2008. January 2008, mostly due to rising commodity prices The Board of Directors proposes a distribution to and expanding domestic demand.Consumer Price Index shareholders, by way of cash dividends, the sum of (CPI) inflation rate reached double-digit levels, peaking EGP816 million, representing a coupon of EGP46.56 at 23.6% in August 2008, the highest level in 19 years. per share for fully paid shares and EGP42.68 per share To curb rising inflation, the Central Bank of Egypt for shares that have been paid in January 2008. raised its benchmark corridor interest rates by 275 basis points between February and September 2008; thus, The Board of Directors also proposes a distribution bringing the overnight deposit and lending rates to of EGP116 million (10% of net profits for 2008) to 11.5% and 13.5%, respectively. As global commodity bank staff as profit sharing. The balance of profits, prices started to fall, Egypt's inflation rates started to amounting to EGP231 million, will be transferred to decline gradually. support the bank's reserves; distributed as EGP58 million for Statutory Reserve and EGP173 million for The high inflation accompanied with a high fiscal General Reserve. deficit has led Moody's to lower the outlook on its Ba1 rating for Egypt to 'Negative' from 'Stable' and to revise

2 Business and operational activities distribution channels, including e-banking, Telephone Banking, Automated Teller Machines (ATM's), as Corporate and Investment Banking complementary channels offering customer convenience HSBC Bank Egypt remains a leading bank in Corporate and 24/7 banking transactions capability at lower costs. Banking, providing a full range of diversified corporate Upwards of 25% of customer base are registered e- products to a wide base of customers with different banking customers actively using internet banking financial needs. True to the HSBC global brand "The systems, which are continuously upgraded to ensure world's local bank", HSBC Bank Egypt positions itself highest security measures and greater functionality. as the number-one local bank with global links, serving HSBC Bank Egypt website was awarded "Best the growing needs of its Egyptian-based customers to Consumer Internet Bank" in the region within the reach out to global markets for reliable professional Global Finance 2008 awards. financial services and products. HSBC Bank Egypt continued its focus on enhancing During the second quarter of 2008, HSBC Bank its propositions and products/services suites to its Egypt launched its Small and Medium Enterprises customers, providing its Premier customer base with proposition, targeted to an economic segment which the best-in-class global propositions and wealth presents substantial growth opportunities. Different management opportunities. The "Premier Children's financial packages have been tailor-made to serve the Saving Accounts", which is a unique proposition to varying financial needs and sizes of Small and Medium HSBC, catering for the children of Premier customers Enterprises. HSBC's electronic banking tool, HSBC-net, inside and outside Egypt, was introduced during the has grown by 60%, offering a check outsourcing year. Other wealth management products encompass functionality which remains to be a unique service in the foreign and local currency Capital Protected Funds, local market. Transaction electronic banking had almost Bancassurance propositions and saving certificates, all doubled during 2008, earning HSBC the Number one of which have shown strong demand and successful Bank in Global Transaction Banking by Treasury performance throughout the year. Management International magazine. Perpetuating its focus on service quality levels, Maintaining its leading position in the Custody higher customer satisfaction, and enhanced customer business, HSBC Bank Egypt remains the Number one engagement and long-term relationships, HSBC Bank Global Custodian in Egypt, for the past 5 consecutive Egypt regularly conducts Customer Satisfaction years, as rated by Global Custody magazine, in Surveys and After-Sale Quality Check Programmes, recognition of the 24% growth in business along with aside from continuously engaging in promotional the acquisitions of major new customers from the activities and sponsorship deals to ensure providing its Global Markets. customers with the highest service levels and the best promotional deals and benefits available in both the In 2008, HSBC Bank Egypt acquired many high local and international markets. profile landmark transactions including "Egyptian Offshore Drilling Company" Syndication Project Overall, Personal Financial Services witnessed a Finance whereby HSBC Bank Egypt acted as Mandate successful year and the momentum is being maintained Lead Arranger and Sole Book Runner for a US$500 to continue providing the local market with a best-in- million financing deal in support of a major construction class product and service proposition during a project by the latter. HSBC is also acting as Facility challenging 2009 ahead. Agent, Japan Bank for International Cooperation agent, on-shore/off-shore account bank and security trustee for Treasury the transaction. The Egyptian pound continues to benefit from large interest rate differential with major currencies. This has Personal Financial Services PFS resulted in a gradual appreciation for the Egyptian In pursuit of the Personal Financial Services strategy to pound over the past couple of years. grow its local market share and provide the utmost The banking sector in Egypt has become more convenience to its customer base, HSBC Bank Egypt sophisticated and the spreads have sharply declined due branch network increased to reach 75 branches and to the increased competition. On the other hand, asset units, targeting new areas and frontiers such as the Delta quality has become healthier due to capitalisations, and the Suez Canal strips, all offering the full range of mergers and foreign acquisitions. retail products and services to the local market. HSBC Bank Egypt Treasury counts amongst the During the year, and in its effort to enhance customer most active providers of treasury services in Egypt in retail experience, Personal Financial Services also the local foreign exchange market, money market, focused on enhancing and promoting its direct

3 HSBC BANK EGYPT S.A.E.

Report of the Directors (continued)

Treasury bill and bond market. It provides excellent talented students from Egypt's public schools, as well customer service with very competitive pricing offering as The Association of Upper Egypt for supporting the various foreign currencies hedging strategies using education of 50 unprivileged students. derivatives where HSBC Group has wide experience. Stemming from its social responsibility towards the Frequent market commentaries via internet and fax are welfare of community and the betterment of its living regularly sent to customers. conditions, HSBC Bank Egypt embarked on its "Upgrading of Informal Settlements" five-year Operational developments programme, addressing one of the most pressing Aligning with HSBC Group strategy, and in an attempt problems in Egypt, through a cumulative budget of to minimise manual processes and reduce back office EGP100 million - 120 million. Based on a operations via "straight through processing", HSBC comprehensive needs/capacities assessment conducted Bank Egypt is joined-up with the Group and Middle in 2008, HSBC Bank Egypt intends to undertake the East for the OneHSBC initiative and will be a fast betterment/ upgrade of the Dar El Salam informal area follower to the Group pilots for Account Opening located to the rear zone of HSBC Bank Egypt new head project. office for the first phase of the programme (2008 - 2009). HSBC Bank Egypt was one of the early banks to In line with the same objective, HSBC Bank Egypt integrate the newly established Credit Bureau supported several social institutions during 2008, functionality in its process and technology. This including: The Hope Village Society, donating medical significantly improved managing the turnaround time and food supplies to the latter's Mobile Service Units for credit applications and printing requirements in line reaching more than 120 street children a day in various with our cost reductions and environmental objectives. parts of the country; El Nour Institution for the Blind, donating computers, Ibsar software and Optical Technical and process enhancements have been Character Recognition software for establishing a introduced to the Information Technology Help Desk, computer centre for the education of the 280 blind the Disaster Recovery site, and all the bank's desktops students enrolled by the institution; and The Egyptian and servers have been aligned with the latest Group Society for Developing Skills of Special Needs recommendations and upgrades. Children, equipping their library with books, tools, A state-of-the-art statement printing facility has softwares and flash cards for the use of autistic children been established, reducing the print cycle durations, and their parents asides from supporting their catering for full colour statement generation and a high therapeutic programmes. level of personalisation. A centralised printing solution Regarding Health Care support, being another key was introduced for all Head Office staff in order to cater area of corporate sustainability focus, HSBC Bank for printing, fax processing and scanning in one easy- Egypt extended its support to major health care to-use solution. projects/ institutions, including: donation of a complete With HSBC Group pioneering in latest Endoscopy System, a Duodeoscope, and a technologies, the bank applied the Six Sigma Colonvideoscope to The National Cancer Institute; an methodology in process re-engineering. A Six Sigma operation theatre to Yahia Arafa Children's Charity section was initiated and a team of certified Six Sigma Foundation; medical supplies to Operation Smile Black and Green belts completed a number of projects Egypt's 2008 mission; and free health care for kidney which reduced cost, increased efficiency and patients of El Mansoura Hospital-Urology and introduced automation. Nephrology Centre. On 16 June 2008, HSBC Bank Egypt successfully Extending from its mission to perpetuate/preserve inaugurated its New Head Office in Maadi. Considered cultural heritage, HSBC Bank Egypt is also sponsoring one of the most prestigious office buildings in Egypt, the set-up of ten 25-desk classrooms in the educational the New Head Office is built in accordance with centre of the Grand Egyptian Museum, a project that is international standards meeting high level of working expected to significantly contribute to the future environment expectations. development of Egypt.

Corporate Sustainability Staff training and development HSBC Bank Egypt continued its efforts to deliver its HSBC Bank Egypt sustained its commitments towards corporate sustainability strategy, focusing on major attracting a high caliber workforce and is today viewed educational projects including The American as 'the best place to work' in the Financial Services University in Cairo Public School Scholarship Fund sector. programme, intended as an endowment scholarship for The increase in number of staff in 2008 to 1,931

4 (from 1,580 in 2007) to cater for aggressive growth necessitated focus on training and developing its staff members in order to sustain our identity and ensure high standard of services extended to our customer. This entailed several training events in Personal Financial Services, Corporate or Short and Medium Enterprises. Hence, HSBC Bank Egypt staff members were provided with specially tailored programmes in the form of classroom training, on-the-job training, front line accreditation and off-site courses. Our local Learning and Development department delivered 12,250 trainee days in 2008. In-house courses were attended by 3,928 staff members, and 433 staff members attended on-the-job training conducted by HSBC Bank Egypt Training department. Additionally, the bank supported 26 staff members in acquiring their diplomas and certificates, 903 staff members in attending external courses held by the most reputable training institutions in Egypt and 29 staff members in attending overseas courses in UAE, USA, the UK, Luxemburg, Prague and Bahrain.

Board of Directors

• In January 2008, Mahmoud Abdallah, Chairman of the Insurance Holdings Company, was appointed as a Director representing Misr Insurance Company (previously Egyptian Re-Insurance Company) replacing Mohamed Gamal El Din Hamza • As of 31 December 2008, David Hodgkinson retired from HSBC Group.

5 HSBC BANK EGYPT S.A.E.

Auditors’ Report to the Shareholders

Report on the Financial Statements We have audited the accompanying unconsolidated financial statements of HSBC Bank Egypt S.A.E, which comprise the unconsolidated balance sheet as at 31 December 2008, and the unconsolidated statements of income, changes in equity and cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.

Management's Responsibility for the Financial Statements These financial statements are the responsibility of the bank's management. Management is responsible for the preparation and fair presentation of these financial statements in accordance with the Central Bank of Egypt's rules issued on 27 June 2002 and its amendments for the preparation and presentation of banks' financial statements and in the light of the prevailing Egyptian laws. Management responsibility includes, designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. This responsibility also includes selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Egyptian Standards on Auditing and in the light of the prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the bank's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the bank's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion In our opinion, the financial statements referred to above, present fairly, in all material respects, the unconsolidated financial position of HSBC Bank Egypt S.A.E as of 31 December 2008, and of its financial performance and its cash flows for the year then ended in accordance with the Central Bank of Egypt's rules issued on 27 June 2002 and its amendments for the preparation and presentation of banks' financial statements including those amendments relating to financial investments issued on 16 December 2008 and the Egyptian laws and regulations relating to the presentation of these financial statements.

Report on Other Legal and Regulatory Requirements It was not revealed to us that the bank had violated any of the provisions of the Central Bank of Egypt, Banking and Monetary Institution Law no. 88 of 2003 during the financial year ended 31 December 2008. The Bank maintains proper books of account, which include all that is required by law and the statutes of the bank, and the financial statements are in agreement thereto. The financial information included in the Board of Directors' report, prepared in accordance with Law No.159 of 1981 and its executive regulations, is in agreement with the bank's books of account.

KPMG Hazem Hassan 10 February 2009 Hassan Basyoni Cairo

Ernst and Young Nabil Istanbouli Cairo

6 HSBC BANK EGYPT S.A.E.

Balance Sheet as at 31 December 2008

Notes 2008 2007 EGP EGP Assets Cash and due from the Central Bank of Egypt 4 2,296,374,817 1,936,797,778 Due from banks 510,249,045,367 10,552,277,773 Treasury bills 6 5,771,558,538 2,947,065,547 Loans and advances (net of provision) 9,8 13,574,880,931 10,083,837,609 Financial derivatives 15 — 570,364 Financial assets: Investments available for sale 7 35,255,678 20,341,088 Investments held-to-maturity 7 1,316,281,103 1,217,064,946 Investments in subsidiaries 10 35,516,810 15,916,810 Debit balances and other assets 11 389,822,704 471,186,737 Fixed assets (net of accumulated depreciation) 12 370,208,653 199,112,775

Total assets 34,038,944,601 27,444,171,427

Liabilities Due to banks 13 845,874,074 2,469,544,186 Customers ’ deposits 14 29,225,538,259 22,114,834,435 Financial derivatives 15 1,286,928 — Credit balances and other liabilities 16 530,166,352 355,268,355 Dividends payable — 722,555,607 Other provisions 17 199,096,758 154,386,607

Total liabilities 30,801,962,371 25,816,589,190

Shareholders ’ equity Issued and paid up capital 18 1,508,500,056 1,072,500,072 Reserves 19 564,583,229 555,082,165

Total shareholders ’ equity 2,073,083,285 1,627,582,237 Net profit for the year 1,163,898,945 —

Total shareholders ’ equity and net profit for the year 3,236,982,230 1,627,582,237

Total liabilities, shareholders ’ equity and profit for the year 34,038,944,601 27,444,171,427

Contingent liabilities and commitments Bank ’s liabilities for letters of credit, letters of guarantee, acceptances and others 20 4,347,288,308 4,214,586,110

The accompanying notes are an integral part of these financial statements. Auditors ’ Report included.

Abdel Salam El Anwar, Chairman and CEO

7 HSBC BANK EGYPT S.A.E.

Income Statement for the Financial Year Ended 31 December 2008

Notes 2008 2007 EGP EGP Income Interest income on loans and balances with banks 1,884,731,392 1,316,297,778 Discount and interest income on treasury bills and bonds 437,653,211 374,596,435

Interest expenses on deposits and borrowings (1,167,521,154) (907,864,726)

Net interest income 1,154,863,449 783,029,487

Fees and commission income 343,854,946 268,139,577 Dividends 23,283,418 21,124,675 Gains from trading income 317,635,095 227,269,353

Gains from sale of financial investments 13,972,510 5,500,041 Other operating income 8,222,476 3,655,392 Provision no longer used 62,650,640 65,651,429

Net operating income 1,924,482,534 1,374,369,954

Fees and commission expenses (25,107,076) (13,545,088) Provisions (88,161,882) (75,554,982) General administrative expenses, depreciation and amortisation (498,097,136) (343,876,946)

Operating profit 1,313,116,440 941,392,938 Non-operating (loss/gain) (587,428) 69,666

Net profit before taxes 1,312,529,012 941,462,604

Income tax (151,336,754) (38,002,209)

Deferred tax 21 2,706,687 2,005,965

Net profit after taxes 1,163,898,945 905,466,360

Earning per share 22 59.77 63.83

The accompanying notes are an integral part of these financial statements.

8 HSBC BANK EGYPT S.A.E. Changes in Shareholders’ Equity Statement for the Financial year Ended 31 December 2008

Fair value reserve for Issued investment and paid up Legal General Share available for Net capital reserve reserve premium sale profit Total

EGP EGP EGP EGP EGP EGP EGP

Balance as at 31 December 2006 1,072,500,072 102,478,957 262,964,569 6,727,886 ——1,444,671,484

Net profit for 2007 ———— —905,466,360 905 ,466 ,360

Transferred to reserves — 45 ,273 ,318 137 ,637 ,435 ——(182,910,753) —

Dividends paid ———— —(722,555,607) (722,555,607)

Balance as at 31 December 2007 1,072,500,072 147,752,275 400,602,004 6,727,886 ——1,627,582,237

Capital increase 435,999,984 ——— ——435,999,984

Net profit for 2008 ———— —1,163,898,945 1,163,898,945

Revaluation differences for investments available for sale after tax ————9,501,064 — 9,501,064

Balance as at 31 December 2008 1,508,500,056 147,752,275 400,602,004 6,727,886 9,501,064 1,163,898,945 3,236,982,230

9 HSBC BANK EGYPT S.A.E.

Appropriation Statement for the Financial Year Ended 31 December 2008

2008 2007 EGP EGP Profit available for appropriation

Net profits for the year 1,163,898,945 905,466,360

Net profits available for appropriation 1,163,898,945 905,466,360

Appropriations

Legal reserve 58,194,947 45,273,318 General reserve 173,313,119 137,637,435 Shareholders ’ dividends 816,000,984 632,008,971 Employees ’ profit share 116,389,895 90,546,636

1,163,898,945 905,466,360

10 HSBC BANK EGYPT S.A.E.

Cash Flow Statement for the Financial Year Ended 31 December 2008

2008 2007 EGP EGP Cash flow from operating activities Net profit before income tax 1,312,529,012 941,462,604

Adjustments to reconcile net income to net cash flow from operating activities

Depreciation and amortisation 35,853,066 23,916,157 Provisions formed during the year 80,443,808 75,554,982 Revaluation difference of bonds in US dollars 19,534 (8,074,254) Amortisation of unearned discount of bonds (121,379) (724,735) Amortisation of bonds premium 420,048 1,074,191 Increase in end of service compensation provision 21,546,205 21,110,983 Loss/gain on sale of fixed assets 578,428 (69,666) Gain from assets reverted to the bank (2,458,086) — Revaluation differences for provisions other than loans provision 20,510 (20,637) Provisions used other than loans provision (2,222,721) (214,260 ) Provisions no longer required (62,650,640) (44,291,569) Income tax paid during the year (38,020,209) —

Net operating profit before changes in assets and liabilities 1,345,937,576 1,009,723,796

Net decrease/(increase) in assets Deposits with banks 742,117,093 (5,195,996,060) Treasury bills (2,017,371,350) (1,095,457,888) Central Bank of Egypt certificates of deposits — 3,568,086,377 Financial derivatives net 1,286,928 570,364 Loans to customers (3,489,263,768) (4,844,001,190) Debit balances and other assets 40,997,203 (150,976,605)

Net increase/(decrease) in liabilities Due to banks (1,623,670,112) 2,278,327,999 Customers ’ deposits 7,110,703,824 6,906,897,545 Credit balances and other liabilities 62,133,816 13,368,877

Net cash provided from operating activities 2,172,871,210 2,490,543,215

11 HSBC BANK EGYPT S.A.E.

Cash Flow Statement for the Financial Year Ended 31 December 2008 (continued)

2008 2007 EGP EGP Cash flow from investing activities Payments for purchase of investments held-to-maturity (429,831,120) (247,363,379) Payments for purchase of investments in subsidiaries (19,600,000) — Proceeds from sale/refund of investments held-to-maturity 330,296,760 85,409,000 Payment for purchase of fixed assets and establishing new branches (163,663,807) (169,910,757) Investments available for sale (5,976,428) (1,580,283) Proceeds from sale of fixed assets and assets reverted to banks 3,722,764 101,849

Net cash /(used in) investing activities (285,051,831) (333,343,570)

Cash flow from financing activities Capital increase 435,999,984 — Dividends paid (722,555,607) (471,781,670)

Net cash (used in)/provided from financing activities (286,555,623) (471,781,670)

Net increase in cash and cash equivalents during the year 1,601,263,756 1,685,417,975 Cash and cash equivalents at the beginning of the year 3,000,158,951 1,314,740,976

Cash and cash equivalents at year end 4,601,422,707 3,000,158,951

Cash and cash equivalents are represented in: Cash and due from the Central Bank of Egypt 2,296,374,817 1,936,797,778 Due from banks 10,249,045,367 10,552,277,773 Treasury bills 5,771,558,538 2,947,065,547 Deposits with banks (9,648,432,308) (10,390,549,401) Treasury bills due over three months (4,067,123,707) (2,045,432,746)

Cash and cash equivalents 4,601,422,707 3,000,158,951

The accompanying notes are an integral part of these financial statements.

12 HSBC BANK EGYPT S.A.E.

Notes on the Accounts

1 Status and activities

HSBC Bank Egypt S.A.E, an Egyptian joint stock company, was established under the Investment Law in accordance with the Minister of Investment and International Cooperation ’s decree No 60 of 1982 published in the Egyptian Official Gazette on 17 May 1982. The bank started its banking activities on 5 December 1982. It provides a comprehensive range of banking and related financial services through its Head Office in Cairo, 74 branches and outlets in prominent cities in Egypt.

2 Significant accounting policies

a Basis of preparing the financial statements The financial statements are prepared in accordance with the instructions of the preparation and presentation of financial statements for Egyptian banks issued by the Central Bank of Egypt dated 27 June 2002, as well as with the relevant local laws and regulations. The bank also prepares consolidated financial statements which include the financial statements of the bank and its subsidiaries. The bank changed the accounting policies for the investments available for sale and held-to-maturity in accordance with the instructions issued by The Central Bank of Egypt dated 16 December 2008, and these changes are as follows: — Evaluate the investments available for sale at fair value and charges the share holders equity with the evaluation differences instead of using the lower of cost or market. — Premium/discount is amortised using the effective interest rate method instead of using the straight line method when valuating the investments held-to-maturity using the amortised cost method and no material differences were noted. — The mutual fund certificate held by the bank till the maturity of the mutual fund are evaluated at cost and any impairment losses included in the difference between cost and redemption for each fund instead of charging it to the income statement. — Recognition for the financial derivatives is in the financial position and recognised at fair value.

b Foreign currency transactions and balances The bank maintains its accounts in Egyptian pounds. Transactions in foreign currencies are translated into Egyptian pounds at the prevailing exchange rates at the dates of the transactions. At the date of the balance sheet, balances of monetary assets and liabilities denominated in foreign currencies are translated at the prevailing exchange rates at that date. Any gains or losses resulting from the translation are taken to the income statement: — Net trading income or net income arising from financial instruments originally classified as change in fair value through profit and loss for financial assets/liabilities held for trading or originally recorded at fair value through profit and loss. — Equity derivatives to cover the cash flows or to cover the investments. — Other operating income ( expenses) for the other items Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between transaction differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Transaction differences related to changes in the amortised cost are recognised in profit and loss, and other changes in the carrying amount are recognised in equity. Translation differences on monetary items, such as equity held at fair value through profit or loss are reported as part of the fair value gain or loss. Translation differences on monetary items such as equities classified as available for sale financial assets are included in the fair value reserve in equity.

c Revenue recognition Revenue is recognised on an accrual basis, except the recognition of interest on doubtful loans which ceases when the recovery of interest or principal is in doubt. Dividend income is recognised when the dividends are declared.

d Treasury bills Treasury bills are recorded at their nominal value. Unearned discount on treasury bills is included under the caption of ‘Credit balances and other liabilities ’. Treasury bills are presented in the balance sheet net of the unearned discount.

13 HSBC BANK EGYPT S.A.E.

Notes on the Accounts (continued)

2 Significant accounting policies (continued)

e Financial assets The Bank classified its financial assets into the following categories: financial assets at fair value through profit or loss, held-to-maturity investments; available-for-sale financial assets. Management determines the classification of its investments at initial recognition. i Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held for trading and financial assets designated at fair value through profit or loss at inception. — Financial assets are classified as held for trading if they are acquired or incurred principally for the purpose of selling in the near term or if part of a portfolio of identified financial instruments that are managed together and for which there is evidence of recent actual pattern of short-term profit taking. Derivatives are also categorised as held for trading unless they are designated as hedging instruments. — Financials assets and financial liabilities are designated at fair value through profit or loss when: — Doing so significantly reduces measurement inconstancies that would arise if the related derivatives were treated as held for trading and underlying the financial instruments were carried at amortised cost for such as loans and advances to customers or banks and debt securities in issue. — Certain investments, such as equity investments that are managed and evaluated at the fair value basis in accordance with a documented risk management or investment strategy and reported to key management on that basis are designated at fair value through profit and loss — Financial instruments such as debt securities held containing one or more embedded derivatives significantly modify the cash flows are designated at fair value through profit and loss — Gain and losses arising from changes in the fair value of derivatives that are managed in conjunction with designated financial assets or financial liabilities are included in the net income from financial instruments designated at fair value — No reclassification of any financial derivatives from the financial instrument group at fair value though profit and losses at during the held-to-maturity period and there is no reclassification at fair value through profit and losses in case that the bank had declared at initial recognition the treatment at fair value from profit and losses ii Held-to-maturity investments financial assets Held-to-maturity is non derivative financial assets with fixed or determinable payments and fixed maturities that the bank's management has positive intention and ability to hold it to maturity. If the bank was to sell other than an insignificant amount of held-to-maturity assets, the entire category would be reclassified as available for sale except in necessary cases. iii Available for sale investment These are non derivatives financial assets available for sale and the bank has the intention to keep them for an undefined period of time which may be sold in response to the need for liquidity, or change in the interest rates, exchange rates or equity prices The financial assets treatment is as follows:- — Financial assets are initially recognised at fair value, regular way purchase and sales of financial assets at fair value through profit or loss, held-to-maturity and available for sale are recognised on trade date, the date on which the group communicate to purchase or sell the asset. — Financial assets are initially recognised at fair value plus transaction cost for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss. Financial assets carried at the fair value through profit and loss are initially recognised at fair value and translation costs are expensed in the income statement — Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired where the group has transferred substantially all risks rewards of ownership. Financial liabilities are recognised when they are extinguished that is when the obligation is discharged, canceled or expires. — Available for sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value, loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest rate method. — Gains and losses arising from changes in fair value of the financial assets at fair value through profit or loss category are included in income statement in the period in which they arise — Gains and losses arising from changes in the fair value of available for sale are recognised directly in equity is recognised in profit and loss however interest calculated using effective interest rate method and foreign currency gains are recognised in the income statement.

14 2 Significant accounting policies (continued)

— Dividends on available for sale equity instruments are recognised in the income statement when the entity right to receive payment is established. — The fair value of quoted investments in an active market is based on the current bid prices if there is no active market for a financial asset, the group establishes fair value using valuation techniques, these include the use of recent arm's length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants. — The bank can reclassify the financial assets to held-to-maturity that are no longer for the purpose of sale or repurchase in the near future. The reclassification to financial assets from available for sale if the bank has the intention and the capacities to keep them in future or it can be reclassified to financial assets held-to- maturity or to loans and receivables if the loans and receivables conditions applies if the bank has the intention for keeping the assets till the date of maturity — Financial assets with fixed or determinable payments and fixed maturity valued at amortised cost, using the effective interest method in case of impairment the profits and losses that has been previously recognised directly in equity is removed from equity and recognised in the income statement. — Profits and losses related to financial assets without fixed or determinable maturity are held in equity till selling or dispose the asset then removed from equity and recognised in the income statement. In case of impairment the profits and losses that has been previously recognised directly in equity is removed from equity and recognised in the income statement. — The reclassified held-to-maturity characterised with determined principal amount at maturity or can be determined and measured at amortised cost, which represents the face value plus/ minus the premium / discount that will be amortised through the income statement using the effective rate method. — In all cases if the bank reclassifies a financial asset as noted, then at subsequent date, the bank increases its estimate of future cash flows due to the increase in the return from these cash flows, the recognition of the effect of the increase as a reconciliation of the actual rate of return from change and at the date of the estimate change. iv Loans and receivables Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market other than: — Those that the entity intends to sell immediately or in the near term, which shall be classified as held for trading, and those that the entity upon initial recognition designates as at fair value through profit or loss. — Those that the entity upon initial recognition designates as available for sale. — Those for which the holder may not recover substantially all of its initial investment, for reason other than because of credit deterioration, which shall be classified as available for sale.

f Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount reported in when, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. The transactions of purchase treasury bills with commitment to resale are classified within the Treasury bills items in the balance sheet.

g Derivative financial instruments and hedging accounting — Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently measured at fair value. Fair values are obtained from quoted market prices in active markets, including recent markets transaction and valuation techniques including discounted cash flow models and option pricing models, as appropriate. All derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. — Certain derivatives embedded in other financial instruments such as the conversion option and convertible bond are treated as separate derivative when their economic characteristics and risks are not closely related to those of host contract and the host contract is not carried at fair value through profit and loss. These embedded derivatives are measured at fair value with changes in fair value recognised in the income statement unless the group chooses to designate the hybrid contracts at fair value through profit and loss — Derivatives that do not qualify for hedge accounting Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in the income statement under net trading income. However, the gain and losses arising from changes in the fair value of derivatives that are managed in conjunction with designated financial assets or financial liabilities are included in the “net income” from financial instruments designated at fair value.

15 HSBC BANK EGYPT S.A.E.

Notes on the Accounts (continued)

2 Significant accounting policies (continued)

h Repos and reverse Repos transaction Repos (reverse Repos) agreement are eliminated (recorded) on the financial position under “Treasury bills and other notes discountable at the Central Bank of Egypt. Whereas its cost (revenue) is recorded in “interest received from treasury bills and bonds ” item in income statement using the effective interest method

i Impairment of financial assets i Assets carried at amortised cost: The bank assesses at each balance sheet date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if. there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event ”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. The criteria that the bank uses to determine that there is objective evidence of an impairment loss includes: — The debtors or a group of debtors is experiencing significant financial difficulty. — Defaulter delinquency in interest or principal payments. — Intention of bankruptcy proceedings. — Deterioration of the borrower competitive position. — Changes in arrears or economic conditions that correlate with defaults. — Deterioration in the value of the collaterals. — Deterioration in the credit grade level. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows. In general the period used to vary between three months and twelve months in exceptional cases longer period are warranted.

The bank first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the bank determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment. The amount of the loss as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of loss is recognised in the income statement. If the loan or held-to-maturity investment has a variable interest rate the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract as a practical expedient, the group may measure impairment on the basis of an instrument's fair value using an observable market price ii Assets classified as available for sale The bank assesses at each balance sheet date whether there is objective evidence that a financial assets or a group of financial assets is impaired included the available for sale or the held-to-maturity. In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether or not the assets are impaired. During the period starting first July until 31 December 2008 the decline in the market prices is not an indicator for impairments

j Financial investments in subsidiaries These investments are evaluated at cost. In the case of impairment in the fair value, the book value is reduced by the impaired value for each investment. Such decrease shall be charged to the income statement under the caption of ‘Investments evaluation differences ’. In case of an increase in the fair value, such increase shall be added to the same item within the limits of amounts charged to the income statement for previous financial periods.

16 2 Significant accounting policies (continued)

k Evaluation of assets reverted to the bank in settlement of some customers ’ debts These assets are stated in the balance sheet under the caption of ‘Debit balances and other assets ’ on the basis of their assigned value. In case the fair value of these assets, at the balance sheet date, is below the value by which they were reverted to the bank, the difference is charged to the income statement. In case of an increase in the fair value, such increase shall be credited to the income statement within the limits of amounts charged to the income statement in previous financial periods.

l Provisions for loans and provisions for contingent liabilities The bank establised a provision for specific debts, in addition to a general provision for the other debts and contingent liabilities within a percentage ranging from 1 to 5 in line with Central Bank of Egypt new regulations issued on 6 June 2005 in respect of Obligor Risk Rating and Provisioning. Non performing loans, which are deemed uncollectible, are written off against the provision. Collections from loans previously written off are added back to the provision.

m Contingent liabilities and commitments Contingent liabilities, in which the bank is party are disclosed under the caption of ‘Contingent liabilities and commitments ’ as they do not represent actual assets or liabilities at balance sheet date.

n Cash and cash equivalents For the purpose of preparing the cash flow statement, cash and cash equivalents include cash on hand, cash with the Central Bank of Egypt, current accounts with banks and treasury bills with a maturity of less than three months from the date of acquisition.

o Fixed assets and depreciation Fixed assets are stated at historical cost less accumulated depreciation. Depreciation is computed by the straight line method over the estimated useful life of each asset. Fixed assets are depreciated according to the following: Buildings 20 Years Furniture and office equipment 10 Years Communication equipment and computers five Years Motor vehicles five Years Fixtures three Years Fixtures in the rented branches are depreciated over the shorter of the estimated useful life or the rental contract term.

p End of service benefits i End of service bonus The bank contributes to the social insurance scheme related to the social insurance authority for the benefit of its employees according to the Social Insurance Law No 79 of 1975 and its amendments. The income statement is charged with these contributions on an accrual basis. Based on the bank ’s internal regulations, employees are granted end of service bonus according to their periods of service. Provision is provided based on the present value in light of actuarial assumptions determined as balance sheet date. ii Medical care programme The amount of medical care liability is calculated according to the present value of these liabilities in light of the determined actuarial assumptions at the balance sheet date. iii Shares based payment HSBC in United Kingdom grants some employees shares based in its internal regulations'. HSBC Bank Egypt is responsible for the payment of cost of these shares and charging the amount on the income statement using fixed installments.

17 HSBC BANK EGYPT S.A.E.

Notes on the Accounts (continued)

2 Significant accounting policies (continued)

q Taxes Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except that which relates to items recognised directly in equity , in which case it is recognised in equity. Current tax is payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date and any adjustment to tax payable in respect of previous years. Deferred tax resulting from temporary time differences between the carrying amounts of assets and liabilities is recognised according to the accounting and tax basis. The amount of deferred tax is determined based on the expected manner of realisation or settlement of assets and liabilities using tax rates prevailing at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised in future years. If expected tax benefits increase, deferred tax assets increase within the amount previously reduced.

3 Financial instruments and risk management

a Financial instruments The bank ’s financial instruments consist of financial assets and liabilities. Financial assets include cash, amounts due from banks, investments and loans. Financial liabilities include customers ’ deposits and amounts due to banks. Financial instruments also include the rights and obligations to others included in the contingent liabilities. Note 2 includes the significant accounting policies applied to measure and recognise these financial instruments and the related revenues and expenses. On the balance sheet date. The fair value, on the balance sheet date, of the financial investments is indicated in Notes 7 and 10. i Fair value of financial instruments According to the evaluation basis of the bank ’s assets and liabilities stated in the notes to the financial statements, the fair value of the financial instruments does not materially differ from their book value. ii Forward contracts Pursuant to the instructions of the Central Bank of Egypt, the bank does not enter into forward contracts except to cover the requirements of foreign currencies or its customers to fulfill their obligations in foreign currencies resulting from their short term transactions.

b Risk management i Interest rate risk The values of some financial instruments fluctuate due to the changes in related interest rates. The bank follows some procedures to minimise the risk such as: — Correlating between the interest on borrowing and lending. — Determining the applied interest rates in consideration with the prevailing discounted rates on various currencies. Note 26 represents the average interest rates applied by the bank during the period on financial assets and liabilities. ii Credit risk Loans to customers, financial investments in the form of bonds, amounts due from banks, rights and obligations from others are considered financial assets exposed to credit risk represented in the inability of those parties to settle part or whole of their indebtedness on the date of maturity. The bank minimises the effect of this risk through the following: — Preparing detailed credit studies about customers before granting the loan. — Obtaining adequate guarantees to reduce the possibility of loss in case of a customer failure. — Regular review and study of customers to evaluate their financial and credit position followed by an estimation of required provisions. —Distribution of loans portfolio among various sectors to reduce the concentration of credit risk. Note 28 shows the diversification of the loans portfolio among various sectors. iii Foreign currency risk The bank ’s activity involves dealing in many foreign currencies which exposes the bank to the risk of loss as a result of the fluctuation of exchange rates. In order to reduce this risk, the bank monitors the balancing of foreign currency positions according to the instructions issued by the Central Bank of Egypt. Major foreign currency positions at the date of the financial position are disclosed in Note 29.

18 4 Cash and due from the Central Bank of Egypt

2008 2007 EGP EGP

Cash in hand 328,149,441 237,794,597 Statutory reserve deposits with the Central Bank of Egypt 1,968,225,376 1,699,003,181

Total 2,296,374,817 1,936,797,778

5 Due from banks

2008 2007 EGP EGP a Central Bank of Egypt Current accounts 2,756,850 2,757,250 Deposits 5,539,427,651 5,756,641,045

5,542,184,501 5,759,398,295

b Local banks Current accounts 38,072,525 91,521,161 Deposits 409,276,187 220,580,000

447,348,712 312,101,161

c Foreign banks Current accounts 62,490,239 67,449,962 Deposits 4,197,021,915 4,413,328,355

4,259,512,154 4,480,778,317

Total 10,249,045,367 10,552,277,773

6 Treasury bills

2008 2007 EGP EGP Treasury bills Treasury bills with original maturity of 91 days 1,725,950,000 906,375,000 Treasury bills with original maturity of 182 days 1,443,050,000 718,400,000 Treasury bills with original maturity of 273 days 1,064,600,000 — Treasury bills with original maturity of 364 days 1,777,125,000 1,383,450,000

6,010,725,000 3,008,225,000 Unearned discount (239,166,462) (61,159,453)

Treasury bills (net) 5,771,558,538 2,947,065,547

19 HSBC BANK EGYPT S.A.E.

Notes on the Accounts (continued)

7 Financial assets

2008 2007 EGP EGP

a Investments available for sale Equity instruments unquoted 35,255,678 20,341,088

Total available for sale investment 35,255,678 20,341,088

b Investments held-to-maturity Debt instruments quoted 1,311,281,103 1,212,064,946 Debt instruments unquoted 5,000,000 5,000,000

Total held-to-maturity investment 1,316,281,103 1,217,064,946

Total financial assets 1,351,536,781 1,237,406,034

Active 1,311,281,103 1,212,064,946 Inactive 40,255,678 25,341,088

1,351,536,781 1,237,406,034

Debt instruments fixed return 1,150,486,636 1,038,200,703 Debt instruments variable return 165,794,467 178,864,243

1,316,281,103 1,217,064,946

As illustrated in note (2-a) there is changes in the accounting policies for the premium/discount using effective interest rate and no material differences were noted

8 Loans and advances (net of provision)

2008 2007 EGP EGP

Customers ’ loans 13,730,989,599 10,307,627,394 Bills discounted 100,818,207 91,912,252

13,831,807,806 10,399,539,646 Unearned discount for discounted bills 256,826 276,030 Loans provisions 234,996,041 273,671,949 Interest in suspense 21,674,008 41,754,058

13,574,880,931 10,083,837,609

20 9 Loans provisions (performing/non performing)

2008 2007

Specific General Total Specific General Total

EGP EGP EGP EGP EGP EGP

Balance at the 171,546,990 102,124,959 273,671,949 196,260,137 72,215,405 268,475,542 begining of the year Formed during the year 12,738,362 24,428,908 37,167,270 6,684,914 29,909,554 36,594,468 Revaluation differences 10,803 — 10,803 (50,358) — (50,358)

184,296,155 126,553,867 310,850,022 202,894,693 102,124,959 305,019,652 Used during the year (38,198,025) — (38,198,025) (12,602,201) — (12,602,201) Provisions no longer required (37,655,956) — (37,655,956) (18,745,502) — (18,745,502)

Balance at year end 108,442,174 126,553,867 234,996,041 171,546,990 102,124,959 273,671,949

10 Investments in subsidiaries

2008 2007

Equity Equity participation participation Amount (percent) Amount (percent)

EGP EGP

HSBC Securities (Egypt) S.A.E. 35,516,810 98% 15,916,810 98%

35,516,810 15,916,810

Investments in subsidiaries are unlisted in capital markets

11 Debit balances and other assets (net)

2008 2007 EGP EGP

Accrued revenues 210,701,357 258,662,072 Prepaid expenses 17,346,982 15,421,019 Advance payments for purchasing fixed assets 982,829 1,098,488 Assets reverted to the bank 6,549,732 7,871,848 Refundable deposits with others 915,920 1,224,589 Other debit balances 40,396,402 33,347,526 HSBC Investment Company Egypt (under liquidation) 3,750,000 3,750,000 Down payment for establishing new branches 109,179,482 149,811,195

Total 389,822,704 471,186,737

21 HSBC BANK EGYPT S.A.E.

Notes on the Accounts (continued)

12 Fixed assets (net of accumulated depreciation)

Furniture and office Land Buildings equipment Computers Vehicles Fixtures Total

EGP EGP EGP EGP EGP EGP EGP Cost As at 1 January 2008 38,915,011 105,658,642 31,586,242 77,510,949 8,903,175 39,815,424 302,389,443 Additions during the year — 147,200,929 25,279,984 18,148,711 814,900 16,109,047 207,553,571 Disposals during the year ——(1,083,831) (1,901,634) (7,500) (2,969,420) (5,962,385)

As at 31 December 2008 38,915,011 252,859,571 55,782,395 93,758,026 9,710,575 52,955,051 503,980,629

Accumulated depreciation As at 1 January 2008 — 24,601,749 13,991,008 42,795,820 4,242,056 17,646,035 103,276,668 Depreciation for the year — 6,466,694 3,316,879 12,185,923 1,490,288 12,393,282 35,853,066 Accumulated depreciation/ disposals ——(836,237) (1,894,756) (7,500) (2,619,265) (5,357,758)

As at 31 December 2008 — 31,068,443 16,471,650 53,086,987 5,724,844 27,420,052 133,771,976

Net book value As at 31 December 2008 38,915,011 221,791,128 39,310,745 40,671,039 3,985,731 25,534,999 370,208,653

As at 31December 2007 38,915,011 81,056,893 17,595,234 34,715,129 4,661,119 22,169,389 199,112,775

At balance sheet date the fixed assets (after depreciation) include assets amounted to EGP33,665,596 which have not yet been notarised under the name of the bank. The legal notarisation procedures of these assets are currently in process. The bank is renting some floors in the main building in Maadi according to Central Bank of Egypt approval dated 9 june 2004

13 Due to banks

2008 2007 EGP EGP a Central Bank of Egypt Deposits — 1,378,625,000

— 1,378 ,625 ,000

b Local banks Deposits — 30,000,000

— 30,000,000

c Foreign banks Current accounts 623,234,951 991 ,134 ,348 Deposits 222,639,123 69 ,784 ,838

845,874,074 1,060 ,919 ,186

Total 845,874,074 2,469 ,544 ,186

22 14 Customers ’ deposits

2008 2007 EGP EGP

Demand deposits 9,007,726,292 6,905 ,815 ,134 Time and call deposits 8,861,077,316 6,737 ,549 ,290 Certificates of deposits and saving accounts 3,756,412,392 2,811 ,323 ,893 Saving deposits 6,863,631,408 4,976 ,123 ,313 Other deposits 736,690,851 684 ,022 ,805

Total 29,225,538,259 22 ,114 ,834 ,435

15 Financial derivative

The bank uses the following derivatives for hedging and non-hedging purposes: — The forward currency contracts represent commitments to buy foreign and local currencies, including the unexercised part of the transactions. — The contracts related to currency exchange and / or return represent commitments to exchange a group of cash flows with others, which results in exchanging the currencies or the return rate (fixed rate with variable rate) or altogether (ie. exchange return and currencies' contracts). — The credit risk at the bank is represented in the contingent cost of exchanging the swap contracts if any of the parties default. The risk is continuously monitored in relation to the fair value and a percentage of the contract value. In order to monitor the existing credit risk, the bank evaluates the other parties on the same basis as the lending activities. — The foreign currency and rate of return option contracts represent contractual arrangements by which the seller gives the buyer the right but not an obligation to either buy or sell, on a specified day, or during a specified period for a certain amount of foreign currency or a financial instrument at a predetermined price. The seller receives a commission in return for accepting the foreign currency or the rate of return risks. Option contracts are either dealt with in the market or agreed upon between the bank and the clients. The bank is exposed to credit risk from the purchased option contracts and is limited to the book value represented in its fair value.

2008 2007

Derivatives held for trading Contracted Contracted amount Assets Liabilities amount Assets Liabilities

Foreign currency derivatives EGP EGP EGP EGP EGP EGP

Currency forward contracts 333,084,044 2,296,719 (3,583,647) 268,840,607 1,380,954 (810,590) Interest rate derivatives Forward contracts 661,644,000 15,029,108 (15,029,108)

Total assets (Liabilities) of derivatives held for trading 17,325,827 (18,612,755) 1,380,954 (810,590)

Net ( Liabilities) assets of derivatives held for trading — (1,286,928) 570,364 —

23 HSBC BANK EGYPT S.A.E.

Notes on the Accounts (continued)

16 Credit balances and other liabilities

2008 2007 EGP EGP

Accrued interest payable 144,956,478 117 ,857 ,145 Unearned revenues 43,650,528 29 ,519 ,470 Accrued expenses 51,715,623 62 ,291 ,150 Creditors 40,904,671 13 ,650 ,651 Liabilities for the staff medical care* 41,700,000 33 ,000 ,000 Income tax for the year 140,463,093 38 ,002 ,209 Deferred tax liabilities 2,375,266 — Other credit balances 64,400,693 60 ,947,730

Total 530,166,352 355,268,355

*The balance represents the present value of liabilities of employees ’ medical care installments determined by the actuarial expert. The interest rate applied on a discount basis by the actuarial expert was 9% annually.

17 Other provisions

Provision for Provision for Provision for end of service contingent contingent compensation claims liabilities Total

2008 2008 2008 2008 2008 EGP EGP EGP EGP

Balance as at the begining of the year 75,063,149 60,445,484 18,877,974 154,386,607 Formed during the year 23,069,441 42,494,046 8,282,492 73,845,979 Provision evaluation difference 19,858 (20,510) — (652)

98,152,448 102,919,020 27,160,466 228,231,934

Used during the year (1,543,094) (2,222,721) — (3,765,815) Provision no longer required — (24,994,684) — (24,994,684) Transferred to credit balances and other liabilities — (374,677) — (374,677)

Balance at year end 96,609,354 75,326,938 27,160,466 199,096,758

Provision for Provision for Provision for end of service contingent contingent compensation claims liabilities Total

2007 2007 2007 2007 2007 EGP EGP EGP EGP

Balance as at the begining of the year 53,952,166 54,028,656 12,296,161 120,276,983 Formed during the year 21,984,946 32,197,791 6,581,813 60,764,550 Provision evaluation difference (344,124) (20,637) — (364,761)

75,592,988 86,205,810 18,877,974 180,676,772

Used during the year (529,839) (214,260) — (744,099) Provision no longer required — (25,546,066) — (25,546,066) Transferred to credit balances and other liabilities ————

Balance at year end 75,063,149 60,445,484 18,877,974 154,386,607

24 18 Capital

a Authorised capital The authorised capital amounted to EGP750,000,000. By virtue of the Extraordinary General Assembly resolution passed on 12 March 2006, the authorised capital has been increased to EGP1,750,000,000.

b Issued and paid up capital The issued and paid up capital amounted to EGP500,000,004 represented in 5,952,381 fully paid shares at par value of EGP84 each. The foreign shareholders own 94.53% of the capital, fully paid in US dollars at the prevailing rate on date of subscription. By virtue of the Extraordinary General Assembly resolution passed on 12 March 2006, the issued and paid up capital has been increased by EGP572,500,068 by issuing 6,815,477 shares. The foreign shareholders own 94‚53% of the capital, fully paid in US dollars at the prevailing rates on the subscription dates accordingly the issued and paid up capital has become EGP1,072,500,072 represented in 12,767,858 fully paid shares at par value of EGP84 each. According to the Board of Directors decision on 30 October 2007, the issued capital has been increased by EGP 435,999,984 by issuing 5,190,476 shares .The increase was fully paid, of which foreign shareholders own 94.53% that was paid in US Dollars at the prevailing rates on the subscription dates. Accordingly, the issued and fully paid up capital is EGP 1,508,500,056 represented in 17,958,334 fully paid shares at par value of EGP84 each.

19 Reserves

As an HSBC Bank Egypt statutory requirement, 5% of the net profit for the year is transferred to the legal reserve. This transfer ceases when the balance of the legal reserve reaches 20% of the paid up capital.

20 Contingent liabilities and commitments

2008 2007 EGP EGP

Letters of guarantee 3,459,333,059 2,871,740,522 Letters of credit (import and export) 1,162,448,426 1,519,642,291 Acceptances 236,348,878 287,716,917 Other contingent liabilities 17,610,553 28,981,411 Margin deposits (528,452,608) (493,495,031)

Total 4,347,288,308 4,214,586,110

21 Deferred tax assets (liabilities)

Deffered tax assets or liabilities are attributable to the following:

Deferred tax 2008

Assets Liabilites

EGP EGP

Fixed assets — (1,561,309) Investments evaluation differences — (41,245) Other provisions 4,309,241 —

Total deffered tax asset/liability 4,309,241 (1,602,554)

Net deffered tax assets 2,706,687 —

25 HSBC BANK EGYPT S.A.E.

Notes on the Accounts (continued)

22 Earning per share

2008 2007 EGP EGP

Net profit for the year 1,163,898,945 905,466,360 Employees ’ profit share for the year (proposed / approved) (116,389,895) (90,546,636)

Shareholder ’s profit share for the year (suggested to be distributed) 1,047,509,050 814,919,724

Weighted average of shares 17,525,794 12,767,858

Earning per share 59.77 63.83

23 Reconciliation of effective tax rate

2008 2007 EGP EGP

Net profit before income tax 1,312,529,012 941,462,604 Tax rate 20% 20%

Income tax calculated on accounting profit 262,505,802 188,292,521 Non-deductible expenses 285,869 142,390 Tax exemptions (109,605,004) (155,026,086) Effect of provisions 3,609,771 8,321,846 Interest in suspense (4,016,010) (1,739,678) Depreciation (1,443,674) (1,988,784)

Total differences (111,169,048) (150,290,312)

Actual income tax according to tax return 151,336,754 38,002,209

Effective tax rate 11.53% 4.04%

24 Capital commitments

New branches and renovations The remaining cost for completing and establishing new branches amounted to EGP15,971,121

25 Maturity of assets and liabilities

Maturity within Maturity after one year one year

EGP EGP a Assets Due from banks 10,249,045,367 — Treasury bills deductable from Central Bank of Egypt 5,771,558,538 — Loans and advances 5,526,349,222 8,305,458,584 Investments available for sale — 35,255,678 Investments held-to-maturity 145,392,118 1,170,888,985 Investments in subsidiaries — 35,516,810 Debit balances and other assets 376,833,767 12,988,937

Total 22,069,179,012 9,560,108,994

b Liabilities Amounts due to banks 845,874,074 — Customers ’ deposits 24,023,036,121 5,202,502,138 Credit balances and other liabilities 530,166,352 —

Total 25,399,076,547 5,202,502,138

26 26 Applied interest rates

The average yield rates for assets and liabilities are 7.08% and 3.56% respectively.

27 Taxation

A summary of HSBC Bank Egypt S.A.E. tax position is as follows: a Corporate tax — Years from the inception of activities until 1988 These years were inspected and disputes were settled in the Internal Committee. — Years from 1989 until 1990 These years were inspected and there is a dispute between the bank and the Tax Authority. The Court of Appeal issued its decision to reduce the tax base. The Tax Authority submitted an appeal to the decision. — Years from 1991 until 2004 These years were inspected and disputes were settled in the Internal Committee and tax was fully settled — Years 2005 until 2007 The bank filed tax declaration for these years within the legal permitted period according to the Income Tax Law number 91 of 2005.The bank started preparing to inspect for 2005 and 2006 .

b Salary tax — Years from 1982 until 2006, these years were settled. — Year 2007, this year was inspected and settlement is in process.

c Stamp duty — Years from 1982 until 2000 These years were inspected and disputes were settled in the Internal Committee and tax was fully settled — Years from 2001 until 31 July 2006 These years were inspected and the internal committees were completed for all branches and disputed items were transferred to the Appeal Committee. Tax also was fully settled . — Period from 1 August 2008 until 31 December 2008 The bank filed quarterly tax returns for this period in compliance with the stamp Tax Law No. 111 for 1980 amended by the Law No. 143 for 2006 and its executive regulations.

28 Distribution of Assets & Liabilities

Customers ’ loans and customers ’ deposits are diversified among various economic activity sectors as of 31 December 2008 as follows:

Agricultural Industrial Trade Service Other sector sector sector sector sectors Total

EGP(000) EGP(000) EGP(000) EGP(000) EGP(000) EGP(000)

Loans and advances 6,791 4,932,371 1,494,673 3,614,368 3,783,605 13,831,808

Customers ’ deposits 22,322 2,838,414 3,203,127 5,852,161 17,309,514 29,225,538

29 Positions of major currencies

2008 2007 EGP(000) EGP(000)

Surplus Deficit Surplus Deficit

EGP 2,400 — — 27,771 USD — 8,590 21,054 — GBP — 1,836 — 553 EUR 1,422 — 1,630 —

27 HSBC BANK EGYPT S.A.E.

Notes on the Accounts (continued)

30 Related party transactions

In the ordinary course of business, the bank conducts transactions with certain shareholders and companies (HSBC Group) and subsidiaries. Such transactions are conducted according to ordinary banking and commercial terms.

2008 2007 EGP EGP

Due from banks 1,585,008,496 1,224,220,418 Investments in subsidiaries 35,516,810 15,916,810 Due to banks 401,268,975 803,919,483 Customers ’ deposits 47,303,117 20,109,035 Cost of services rendered by others 75,123,402 63,657,268 Income of services rendered to others 331,649 —

On 17 September 2007 HSBC Bank Middle East Limited agreed with HSBC Bank Egypt to sell to HSBC Bank Egypt part of its loans portfolio amounting to US$192,332 Thousands (EGP1,025,727 Thousands). HSBC Bank Egypt purchased these loans based on nominal value with no recourse. According to the above mentioned agreement, interest will be split between both parties, based on the percentage of loans bought by HSBC Bank Egypt to total loan portfolio granted by HSBC Bank Middle East Limited. As of 31 December 2008, loan balance amounted to US$ 109,161 Thousands (EGP601,884 Thousands) that has been included under the caption of ‘Loans and advances ’.

On 2 November 2007 HSBC Bank Middle East Limited agreed with HSBC Bank Egypt to sell to HSBC Bank Egypt its share of the syndicated loan managed by HSBC London for US$50,000 Thousands (EGP266,655 Thousands) that has been included under the caption of ‘Loans and advances ’. As of 31 December 2008, loan balance amounted to US$40,168 Thousands (EGP221,476 Thousands).

On 28 August 2008 HSBC Middle East Bank agreed with HSBC Bank Egypt to sell to HSBC Bank Egypt part of loans portfolio amounting to US$ 80,000 Thousands (EGP437,272 Thousands). HSBC Bank Egypt purchased these loans based on nominal value with no recourse. According to the above mentioned agreement, interest will be split between both parties based on the percentage of loans brought by HSBC Bank Egypt to total loan portfolio granted by HSBC Bank Middle East. As of 31 December 2008, loan balance amounted to US$80,000 Thousand (EGP441,096 Thousands) that has been included under the caption of loans and advances.

On 4 November 2008 HSBC Bank Middle East agreed with HSBC Bank Egypt to sell to HSBC Bank Egypt part of loans portfolio amounting to US$ 80,000 Thousands (EGP443,600 Thousands) . HSBC Bank Egypt purchased these loans based on nominal value with no recourse. Accordingly to the above mentioned agreement interest will be split between both parties based on the percentage of loans brought by HSBC Bank Egypt to total loan portfolio granted by HSBC Bank Middle East. As of 31 December 2008, loan balance amounted to US$80,000 Thousands (EGP441,096 Thousands) that has been included under loans and advances.

These loans are subject to loans classification and provisioning rules as set out by Central Bank of Egypt.

31 Trust Activities

Assets held on account or on behalf of other parties Total Related value liabilities

EGP(000) EGP(000)

Shares 41,289,821 (110,573) Treasury bills and Central Bank of Egypt certificates of deposits 1,535,725 — Bonds and invesment certificates 844,907 —

Total 43,670,453 (110,573)

28 32 Mutual funds

Given that the annual report this year will not be printed but only posted on the Intranet and the Internet websites besides being presented on CD's, I recommend that the following paragraphs of the disclaimer at the bottom of the last page be cancelled in both the English and the Arabic languages.

33 Comparative figures

Comparative figures have been reclassified to conform to this year ’s financial statements classification. Profit for the year ended 31 December 2007 was distributed according to the resolution passed during the Annual General Meeting held on 14 February 2008.

29 HSBC BANK EGYPT S.A.E.

HSBC Bank Egypt Head Office and Branches

Head Office Down Town Branch 306 Corniche El Nil, Maadi, Cairo, Egypt 13 Kasr El Nil Street, Down Town, Cairo, Egypt. Tel : (202) 2529 8000 Tel : (202) 2578 8324 Fax: (202) 2529 8080 Fax: (202) 2578 8455 BIC EBBK EGCX Maspiro Branch Cairo Branch Radio & Television Building 3 Aboul Feda Street, Zamalek, Cairo, Egypt. Corniche El Nil, Cairo, Egypt. Tel : (202) 2739 6001 Tel : (202) 2576 9415 Fax: (202) 2736 4010 Fax: (202) 2576 9659 Gezira Sporting Club Branch Nile City Branch Gezira Sporting Club, Sarayah El Gezira Street, Nile City Building, Corniche El Nil, Ramlet Beaulac Zamalek, Cairo, Egypt. North Tower, Retail No. 13 - Cairo, Egypt. Tel : (202) 2736 0863 Tel: (202) 2461 9701 Fax: (202) 2736 0879 Fax: (202) 2461 9703 Mohandessin Branch Sixth of October City Branch ’ 8 Geziret El Arab Street, Mohandessin, Giza, Egypt. Block No 43A, Central Industrial Area, Bank s Area, Tel : (202) 3337 0481 Sixth of October City, Egypt. Fax: (202) 3337 0813 Tel : (202) 3832 7940 Fax: (202) 3832 7941 Lebanon Street Branch 25 Lebanon Street, Mohandessin, Giza, Egypt. Dandy Mall Branch Tel : (202) 3346 7090 28th Kilometre, Cairo/Alexandria Desert Road, Egypt. Fax: (202) 3346 7092 Tel : (202) 3539 0173 Fax: (202) 3539 0174 Gameet El Dewal Branch 54 Gameet El Dewal Street, Mohandessin, Giza, Egypt. Hyper One Market Branch Tel : (202) 33748 6831 Hyper One Market, El Shiekh Zayed City, Entrance 1. Fax: (202) 33748 6878 Sixth of October City, Egypt Tel : (202) 3850 9901 Sphinx Branch Fax: (202) 3850 9903 1 Ahmed Orabi Street, Sphinx Square, Mohandessin, Giza, Egypt. Azhar Branch Tel : (202) 33303 5725 160 Gohar El Kaed Street, Cairo, Egypt. Fax: (202) 33303 5817 Tel : (202) 2589 0865 Fax: (202) 2589 0857 Dokki Branch 80 Mosadak Street, Dokki, Giza, Egypt. Mokattam Branch Tel : (202) 3762 0589 3 El Nafoura Square, Mokattam, Cairo, Egypt. Fax: (202) 3762 0592 Tel : (202) 2667 9891 Fax: (202) 2667 9894 Vinni Branch 8 El Sad El Aaly Street, Vinni, Dokki, Giza, Egypt Heliopolis Branch Tel : (202) 3749 6325 I Roxy Square, Heliopolis, Cairo, Egypt. Fax: (202) 3749 6329 Tel : (202) 2451 1480 Fax: (202) 2258 3152 Shooting Club Branch 40 Kambiz Street, Shooting Club Side,Giza, Egypt El Shams Club Branch Tel : (202) 3760 7936 15 Abdel Hamid Badawy Street, Fax: (202) 3760 8298 Heliopolis, Cairo, Egypt. Tel : (202) 2620 4988 Messaha Branch Fax: (202) 2620 4982 10 A Hussein Wassef Street, Dokki, Giza, Egypt. Tel : (202) 3748 6537 El Orouba Branch Fax: (202) 3748 6574 90 Beirut Street, Heliopolis, Cairo, Egypt. Tel : (202) 2415 3371 Agouza Branch Fax: (202) 2415 3321 128 El Nile Street , Agouza, Giza, Egypt Tel : (202) 3761 8126 Masaken Sheraton Branch Fax: (202) 3761 8154 3 Khaled Ibn El Walid Street, Masaken Sheraton Heliopolis, Cairo, Egypt. Tel : (202) 22666 426 Fax: (202) 2480 2358

30 El Obour Buildings Branch Maadi Branch 13 El Obour Buildings, Salah Salem Street, IB Road 256, New Maadi, Cairo, Egypt. Cairo, Egypt. Tel : (202) 2519 5459 Tel : (202) 2403 1379 Fax: (202) 2519 5458 Fax: (202) 2403 1408 Maadi Sporting Club Branch El Thawra Branch Maadi Sporting Club, Demeshq Street Maadi, 109 El Thawra Street, Heliopolis, Cairo, Egypt. Cairo, Egypt. Tel : (202) 2414 2157 Tel : (202) 2380 4729 Fax: (202) 2417 4428 Fax: (202) 2380 4757 City Stars Branch Corniche El Maadi Branch Tower A2 City Stars project, Heliopolis,Cairo, Egypt. 306, Corniche El Nil, Maadi, Cairo, Egypt Tel : (202) 2480 2356 Tel : (202) 2529 8000 Fax: (202) 2480 2357 Fax: (202) 2529 8080 Korba Branch New Maadi Branch 4 Ibrahim Street, El Korba Square, Heliopolis, 10/2 El Nasr Road, New Maadi, Cairo, Egypt. Cairo, Egypt Tel : (202) 2754 4816 Tel : (202) 2291 1609 Fax: (202) 2754 5521 Fax: (202) 2291 1618 Alexandria Branch Nasr City Branch 47 Sultan Hussein Street, Alexandria, Egypt. 29 El Batrawy Street, Nasr City, Cairo, Egypt. Tel : (203) 487 2949 Tel : (202) 2401 7147 Fax: (203) 487 2925 Fax: (202) 2401 3562 Semouha Branch Abou Dawoud El Zahry Branch Plot 74A Mohamed Ali Road, (Fawzy Muaz Street now) 62 Abou Dawoud El Zahry Street, Nasr City, Semouha, Sidy Gaber, Alexandria, Egypt. Cairo, Egypt. Tel : (203) 421 0004 Tel : (202) 2672 0522 Fax: (203) 421 0008 Fax: (202) 2672 0526 Saraya Branch El Sherouk Branch 38 El Shaheed Abbas El Aasar Street, Sidi Beshr, El Sherouk Academy, El Sherouk City, Cairo, Egypt. Alexandria, Egypt. Tel : (202) 2688 0210 Tel : (203) 358 2202 Fax: (202) 2688 0220 Fax: (203) 358 2339 El Tagamoo Branch Sidi Gaber Branch 106 Town Centre, off 90 Street, Beside GASCO 103 Tanzeem Sidi Gaber Street, Alexandria, Egypt. (NATA), Tagamoo 5, Cairo, Egypt. Tel : (203) 523 2057 Tel : (202) 2920 1716 Fax: (203) 523 3915 Fax: (202) 2920 0123 Yacht Club Branch Abassya Branch Kalaet Kaytbay Street, El Anfoushy, 95 El Abassya Street, Abassya, Cairo, Egypt Alexandria, Egypt. Tel : (202) 2684 4859 Tel : (203) 483 0538 Fax: (202) 2684 4838 Fax: (203) 483 0537 Shoubra Branch Mirage Mall Branch 71 Shoubra Street, Shoubra, Cairo, Egypt Cairo Alexandria Desert Road entrance Tel : (202) 2431 2512 International Garden, Egypt. Fax: (202) 2431 6026 Tel : (203) 381 5232 Fax: (203) 380 2575 10th of Ramadan Branch Gawhara Village, 10th of Ramadan City, Borg El Arab Branch Gawhara Mall , Egypt. Services Area, Fifth District, facing Police Station, Tel : (2015) 386 266 Borg El Arab, Alexandria, Egypt. Fax: (2015) 386 310 Tel : (203) 459 5470 Fax: (203) 459 5473 Obour City Branch 3 Obour City Club Fence,Obour City, Egypt. Tel : (202) 4610 4196 Fax: (202) 4610 4362

31 HSBC BANK EGYPT S.A.E.

HSBC Bank Egypt Head Office and Branches (continued)

Mansoura Branch Hurghada Marina Branch 182 Tanzeem El Geish Street and El Seka El Hadid Sakkala Square, New Marina, Hurghada, Egypt. El Fransaway Street, Mansoura, Egypt. Tel : (2065) 345 0113 Tel : (2050) 230 8124 Fax: (2065) 345 0115 Fax: (2050) 230 8122 Nabq Travco Sharm El Sheikh Branch Mirabel Resort, South Sinai, Egypt. Shamandoura Mall, Ne ’ema Bay, Sharm El Sheikh, Luxor Branch Egypt. Iberotel Hotel Luxor,Qenna, Egypt. Tel : (2069) 360 0615 Tel : (2095) 235 7853 Fax: (2069) 360 0613 Fax: (2095) 235 7786 Tirana Branch Port Said Branch Ne’ema Centre, Ne’ema Bay, Sharm El Sheikh, Egypt. 27 El Gomhoreya Street, Port Said, Egypt Tel : (2069) 360 0615 Tel : (2066) 324 4657 Fax: (2069) 360 0613 Fax: (2066) 324 4694 Sharm Azur Branch Damietta Branch Peace Road, Criss Resort, Building No 8, Damietta Port, Automatic Management Centre, Sharm El Sheikh, Egypt. Damietta, Egypt. Tel : (2069) 360 3790 Tel : (2057) 292 112 Fax: (2069) 360 3793 Fax: (2057) 292 113 Nabq Branch Oriental Resort Main Gate, Nabq Bay, Sharm El Sheikh, Egypt. Tel : (2069) 371 0072 Fax: (2069) 371 0390 Ritz Carlton Branch Ritz Carlton Hotel, Hadabet Om El Seed, Sharm El Sheikh, Egypt Tel : (2069) 366 6009 Fax: (2069) 366 6012 Hilton Dreams Branch Hilton Dreams Hotel, Sharm El Sheikh, Egypt Tel : (2069) 360 3040 Ext (306) Sheraton Road Branch Sheraton Road, Hurghada, Egypt Tel : (2065) 345 0106 Fax: (2065) 345 0110 Hurghada Branch Kotta ’s West Side Mall, Villages Road, Hurghada, Egypt. Tel : (2065) 3440 741 Fax: (2065) 3440 742 El Gouna Branch Abu Tig Marina, El Gouna, Hurghada, Egypt. Tel : (2065) 354 9702 Fax: (2065) 358 0570 Marmara Branch Village Road, Club Marmara, Hurghada, Egypt. Tel : (2065) 346 5231 Fax: (2065) 346 5232 Makadi Branch Makadi Bay,K 32 Safaga Road,Hurghada, Egypt. Tel : (2065) 359 0552 Fax: (2065) 359 0551

32 HSBC BANK EGYPT S.A.E.

The HSBC Group: International Network (as at 2 March 2009)

Services are provided by around 9,500 offices in 86 countries and territories:

Europe Offices Offices

Armenia 13 Luxembourg 4 Austria 1 Malta 54 Belgium 2 Monaco 2 Channel Islands 38 Netherlands 1 Cyprus 1 Poland 24 Czech Republic 7 Russia 12 France 454 Slovakia 4 Georgia 1 Spain 4 Germany 13 Sweden 3 Greece 27 Switzerland 17 Hungary 11 Turkey 229 Ireland 7 Ukraine 1 Isle of Man 8 United Kingdom 1,618 Italy 3

Asia-Pacific

Australia 34 Macau Special Administrative Region 7 Bangladesh 10 Malaysia 49 Brunei Darussalam 12 Maldives 1 China 136 New Zealand 11 Cook Islands 1 Pakistan 9 Hong Kong Special Philippines 27 Administrative Region 325 Singapore 27 India 155 Sri Lanka 15 Indonesia 114 Taiwan 43 Japan 14 Thailand 1 Kazakhstan 3 Vietnam 4 Korea, Republic of 15

Americas

Argentina 226 El Salvador 90 Bahamas 8 Honduras 87 Bermuda 15 Mexico 1,265 Brazil 1,889 Nicaragua 3 British Virgin Islands 3 Panama 83 Canada 292 Paraguay 6 Cayman Islands 13 Peru 17 Chile 2 United States of America 1,584 Colombia 32 Uruguay 11 Costa Rica 46 Venezuela 1

Middle East and Africa

Algeria 2 Libya 2 Bahrain 9 Mauritius 12 Egypt 76 Oman 9 Iran 1 Palestinian Autonomous Area 1 Iraq 15 Qatar 6 Israel 3 Saudi Arabia 88 Jordan 5 South Africa 5 Kuwait 1 United Arab Emirates 33 Lebanon 7

Associated companies are included in the network of offices.

33 HSBC BANK EGYPT S.A.E.

The HSBC Group

HSBC Bank Egypt S.A.E. ’s ultimate parent company is HSBC Holdings plc. Headquartered in London, HSBC Holdings plc is one of the largest banking and financial services organisations in the world. The HSBC Group ’s international network comprises around 9,500 offices in 86 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges, shares in HSBC Holdings plc are held by around 200 ,000 shareholders in over 100 countries and territories. The shares are traded on the New York Stock Exchange in the form of American Depositary Receipts. Through an international network linked by advanced technology , HSBC provides a comprehensive range of financial services: Personal Financial Services (including consumer finance) ; Commercial Banking; Global Banking and Markets ; and Private Banking.

© Copyright HSBC Bank Egypt S.A.E. 2009 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Bank Egypt S.A.E. Published by HSBC Bank Egypt S.A.E., Cairo Cover designed by Addison Corporate Marketing Limited, London; text pages designed by Group Communications (Asia), The Hongkong and Shanghai Banking Corporation Limited, Hong Kong